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You opened with an ad hominem; that's rude and unproductive. Besides that, I don't find what you say to be contradictory to my own views. Boost 1 is an example of breaking Nash equilibria. In a contraction, the individual optimal play is to turtle up, but the overall optimum is to keep the spending going at a slightly lower rate. So the cartel enforcer takes from its members the amount that should be spent and spends it. The error made in practice is that most governments borrow from their central bank at interest rather than raising the cash directly via a capitation with deductions for actual consumer spending. Or they blow the cash on stupid purchases, forgetting that how the money is spent is usually more important than the size of the amount. Boost 2 tends not to happen much in practice, thanks to government corruption and prophylactic bribes by the rich, but when it does, it may trigger capital flight. The Hollande 75% tax in France prompted a few celebrities to leave, but the reality is that rich people have been fleeing high French taxes for decades. Shuffling the currency around has little impact if it does not also change the ownership distribution of revenue-generating assets. If the poor people took their free money and bought shares of profitable businesses with it, that would help. But they tend to buy food, utilities, consumer goods, and rent instead. As such, this redistribution plan is a temporary improvement at best. Drain 1 is not quite the polar opposite of boost 2. When you give rich people more disposable income, they tend to buy more revenue-generating assets, rather than more consumer goods. Once you have one luxury yacht, there isn't much of a reason to buy another. They don't charitably pay others to develop their good ideas; they buy them outright, and reap most of the benefits for themselves. They do very well, and that does not trickle down to the lower classes in practice. Investment does not circulate the currency down in the same way that spending does. Investment attaches burdens and obligations to the money before handing it off to someone else. It slows the money down. Think about how you might feel if someone handed you a $100 bill that was wet and sticky, with strings attached worth -$50 to you, in comparison to someone just handing you a clean, dry $50 bill, that you could use as you pleased. Drain 2 is mostly accurate, except I would say that printing more of a fiat currency is always an absolute drain on the economy, when considered in isolation from whatever is done with the new cash. If you do it at all, you are starting in a hole and need to do a whole lot of good to even get back to ground level. Politically, you often see someone touting the good done with government spending, while if you pull back a bit, you see that it doesn't even make up for a small fraction of the damage done by the currency manipulations required to pay for it. Government's primary value is as a cartel enforcer to break Nash equilibria, wherein the cartel members are forced to act in a way that is sub-optimal for themselves, but which results in an overall better outcome for all participants. Taxation always results in a deadweight loss, except when the good in question has zero or infinite slope on the supply or demand curves. Monetary inflation creates a value gradient in the currency that complicates calculation, and generally enriches those closer to the monetary authority at the expense of those further from it. Government can also prevent tragedy of the commons, by restricting the exclusionary uses of public goods. These functions typically result in greatest efficiency during the reign of the generation born to the revolutionaries. The true believers try to make the government work correctly and efficiently for everyone. But then, some time after, the rot sets in, and people start to use government as a means to promote their own rent-seeking behavior. You simply can't create a tool that only be used for good and never for evil. The dinner knife can spread shit just as well as it spreads butter. |